Abstract

One of alternative ways to maintain the existence of Micro, Small and Medium Enterprises (MSMEs) is to keep the financial institutions exists since MSMEs still have difficulty in accessing the formal bank loans. The respondents of this study are the staff from financial institutions, MSMEs, community leaders, NGOs and related institutions. This study used descriptive analysis which involved two analysis models: Analytic Hierarchy Process (AHP) and Interpretative Structural Modeling (ISM). The results show that there are three effective key elements for development of financial institutions in agricultural sector which are precise target, which means that the loan is given to the MSMEs who really need and satisfy the requirements; in time which means the loan is given when the MSMEs are needed; and an exact amount which means that the total loan which is given is based on the needs. Furthermore, this study recommends three model alternatives in order to fix the effectiveness of financial institutions in financing the MSMEs in agricultural sector at the boundaries of Kalimantan Barat province; (1) develop the existing financial institutions through improvement of rules system and regulations; (2) establish new institution which can be the activator of all existing financial institutions; (3) combine the positive aspects of all existing financial institutions.